McLaughlin identified China, Germany, and Japan as being prime offenders in the global economic meltdown. Their “offense” was that they ran persistent trade surpluses, had savings rates that were “far too high” and consumption rates that were “far too low.” ...
In the first place, if the creditor nations of the world actually follow Mr. McLaughlin’s advice and become borrowers themselves, from just where does Mr. McLaughlin believe the money will come? These countries already lend to America. Does he think that they also have enough leftover to lend to themselves? Does he believe that America, which is tens of trillions of dollars in debt, has enough excess savings to lend? Perhaps he’s eyeing the Martians’ accumulated savings? The point is: the entire world cannot borrow at the same time. Someone has to do the lending. The only reason Americans are able to borrow so much is that those “offending nations” are loaning us the money.
Mr. McLaughlin apparently believes that if those countries simply adopted policies to encourage more consumption, America would then be able to export more products. Just what American-made products does he expect the Chinese to buy? If China did spend more, which they ultimately will, they would simply buy more of their own products that they currently ship to us. After all, if Americans are not buying American-made products, why would the Chinese? In most cases, it’s not that consumers do not want to buy American products: it’s just that there are so few American-made products that are competitive in the global marketplace.
If Americans are not buying American...
...why would the Chinese?
